Monday, December 13, 2010

A Case For the Tax Cuts

In what appears to be an almost epic attempt at political suicide, some Democrats appear so exercized by the very idea that the very rich should continue to enjoy the tax rates of the Bush era that they are willing to push their president, and their own political prospects, over the cliff.

I made my case pretty clear soon after the deal was struck. It was staggering to me how many tangible concessions Obama was able to get for one symbolic give. The GOP got to protect the very rich to the tune of $120 billion for two years. In return, Obama got the $360 billion tax cut for the middle class he wanted, plus $450 billion on extended unemployment benefits, the pay-roll tax cut and EITC and college tuition funding. In the process, he got the GOP to endorse a huge fiscal stimulus for Obama as he runs for re-election - a stimulus that could, according to Morgan Stanley, push economic growth to as much as 4 percent next year. That might be an overshoot - but it's surely salient that no one thinks the package won't boost growth at all.

Charles Krauthammer gets it: "Barack Obama won the great tax-cut showdown of 2010 - and House Democrats don't have a clue that he did."

Bill Clinton gets it. The markets get it. The only question is: why doesn't the House move swiftly to pass this as-good-as-it-will-get deal, and then move forward on START, DADT and the DREAM Act? A week is a long time in politics. Two weeks - which the Democrats could give themselves if they want - could turn a coup into a year-end triumph for the president and this party.